Karnataka High Court
M/S Strategic Outsourcing Service Pvt ... vs Mphasis Limited on 14 March, 2025
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 14TH DAY OF MARCH, 2025
PRESENT
THE HON'BLE MR. N.V. ANJARIA, CHIEF JUSTICE
AND
THE HON'BLE MR. JUSTICE K.V. ARAVIND
COMMERCIAL APPEAL NO. 102 OF 2024
BETWEEN:
1. M/S. STRATEGIC INFRA SERVICES PVT. LTD.,
(FORMERLY KNOWN AS)
M/S. STRATEGIC OUTSOURCING
SERVICE PVT. LTD.,
A COMPANY REGISTERED UNDER
THE COMPANIES ACT, 2013
AT #70/25, 80 FEET
CIRCULAR RING ROAD
4TH BLOCK, KORAMANGALA
BANGALORE - 560 034
REP. BY ITS DIRECTOR
MR. PRADEEP PATIL
... APPELLANT
(BY SRI K.G. RAGHAVAN, SENIOR ADVOCATE A/W
SRI VARUN S., ADVOCATE)
AND:
1. MPHASIS LIMITED
A COMPNAY REGISTERED UNDER
THE COMPANIES ACT, 1956
HAVING ITS OFFICE AT:
BAGMANE WORLD TECHNOLOGY CENTRE
MARATHALLI OUTER RING ROAD
DODDANEKUNDI VILLAGE
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MAHADEVAPURA
BENGALURU - 560 034
... RESPONDENT
(BY SRI DHANANJAY V. JOSHI, SENIOR ADVOCATE FOR MS. KAVITHA DAMODARAN, ADVOCATE) THIS COMMERCIAL APPEAL IS FILED UNDER SECTION 13(1A) OF THE COMMERCIAL COURT ACT, 2015 R/W SECTION 37(1)(C) OF THE ARBITRATION AND CONCILIATION ACT, 1996, R/W RULE 11 OF THE HIGH COURT OF KARNATAKA ARBITRATION (PROCEEDINGS BEFORE THE COURTS) RULES, 2001, PRAYING TO ALLOW THE ABOVE APPEAL AND SET ASIDE THE ORDER DATED 25.01.2024 PASSED BY THE LEARNED LXXXII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE AT BENGALURU (COMMERCIAL COURT-CCH 83) DISMISSING THE PETITION FILED UNDER SECTION 34 OF THE ARBITRATION AND CONCILIATION ACT 1996 FILED BY THE APPELLANT HEREIN IN COMMERCIAL APPEAL NO. 37/2020 (ANNEXURE - A), CONSEQUENTLY SET ASIDE THE ORDER DATED 26.11.2019 THE AWARD PASSED BY THE LEARNED SOLE ARBITRATOR IN A.C. No.51/2019 (ANNEXURE-C) & ETC.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR JUDGMENT, COMING ON FOR PRONOUNCEMENT THIS DAY, JUDGMENT WAS PRONOUNCED AS UNDER:
CORAM: HON'BLE THE CHIEF JUSTICE MR. JUSTICE N.V. ANJARIA and HON'BLE MR. JUSTICE K.V. ARAVIND -3- C.A.V. JUDGMENT (PER: HON'BLE THE CHIEF JUSTICE MR. JUSTICE N.V. ANJARIA) Preferred under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996, read with Rule 11 of the High Court of Karnataka Arbitration (Proceedings before the Court) Rules, 2001, the present appeal is directed against judgment and order dated 25th January 2024 passed by learned LXXXII Additional City Civil and Sessions Judge, Bengaluru (Commercial Court), whereby Commercial Arbitration Petition No.37 of 2020 filed by the appellant herein-M/s. Strategic Outsourcing Services Pvt. Ltd., under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'The Arbitration Act, 1996'), came to be dismissed.
1.1 The appellant also calls in question order dated 19th July 2019 whereby the preliminary objection raised by the appellant in respect of the jurisdiction of the Arbitrator was negatived. By order dated 8th March 2019 passed in Civil Miscellaneous Petition No.238 of 2019, the High Court appointed the Sole Arbitrator, reserving liberty to the appellant to take preliminary objection before the Arbitrator under Section 16 of the Arbitration Act, 1996.
The Arbitrator rejected the preliminary objection regarding jurisdiction by aforementioned order dated 19th July 2019. -4- Claim and Award
2. In challenging the aforesaid order of the court below, in turn, the appellant is aggrieved by the award of the Arbitrator dated 26th November 2019, passed in Arbitration Case No.51 of 2019.
2.1 The arbitral disputes arose from the Settlement Agreement dated 15th July 2016 between the parties, the details of which are referred to in the subsequent paragraphs. The claim of the respondent-Mphasis Ltd. (hereinafter referred to as the 'claimant') before the Arbitral Tribunal was divided into following,
(i) to direct respondent to pay to the claimant Rs.4 crores with interest at 18% per annum from 25th January 2018 till realization;
(ii) to direct respondent to pay to the claimant sum of Rs.23 crores with interest at 18% per annum from 25th January 2018 till realization;
(iii) to direct respondent to pay to the claimant a sum of Rs.14,63,64,791/- by way of damages with interest at 18% per annum from 25th January 2018 till realization;
(iv) to direct respondent to pay to the claimant the entire cost of the proceedings.
2.2 The adjudication of disputes between the parties by the sole Arbitrator ended up with Arbitral Award dated 26th November 2019 as under, -5- "(i) The respondent is liable to repay a sum of Rs.4,00,00,000/- (Rupees Four Crores only) to the claimant.
(ii) The respondent is liable to pay Rs.10,69,59,630/- (Rupees Ten Crores Sixty Nine Lakhs Fifty Nine Thousand Six Hundred and Thirty only) to the claimant.
(iii) Both the above said amounts of Rs.4,00,00,000/- (Rupees Four Crores only) and Rs.10,69,59,630/- (Rupees Ten Crores Sixty Nine Lakhs Fifty Nine Thousand Six Hundred and Thirty only) carry interest at the rate of 10% per annum from the date of notice of arbitration proceedings (25.01.2018) till the date of payment.
(iv) The respondent is entitled to retain Rs.6,83,84,025/- (Rupees Six Crores Eighty Three Lakhs Eighty Four Thousand and Twenty Five only). But out of the said amount, the respondent is liable to pay interest to the claimant as prescribed in the preceding paragraph.
(v) The claimant is entitled to costs.
(vi) Stamp duty is payable as per Karnataka Stamp Act."
Arbitration Disputes
3. As stated above, genesis and the basis of the dispute which arose between the parties was Settlement Agreement dated 15th July 2016. Noticing the facts in this regard standing in the background, the bids were invited by National Institute of Electronics and Information Technology (NIELIT), which is an autonomous scientific body of the Department of Electronics, Ministry of Communication, for the Data Digitalization Services for -6- Creation of Aadhaar Enrolment and National Population Register For the Residents of Rural Area, in which bid process, the appellant herein was selected as successful bidder. The respondent-Mphasis Ltd. (hereinafter referred to as the 'claimant') entered into agreements for purchase in respect of the portions of work carried out in the States of Karnataka, Uttar Pradesh and Bihar.
3.1 The claimant-the respondent herein raised invoices on the appellant (respondent in the Arbitration proceedings, therefore hereinafter identified and referred to as 'respondent' for the sake of convenience) to the tune of Rs.37.60 crores. The parties thereafter entered into negotiations. They settled the total dues for Rs.23.00 crores. In that regard, a Settlement Agreement dated 15th July 2016 came to be entered into. As per the said Settlement Agreement, the appellant was required to pay Rs.23.00 crores towards the full and final settlement to the claimant. It was agreed that the said amount would be paid upon the receipt of payments from NIELIT. Pursuant to the Settlement Agreement, the parties opened a joint Escrow Account on 25th August 2016. The NIELIT was supposed to instruct the respondent-the appellant herein to make all payments in the said Escrow account.
-7-3.1.1 As per the terms of the Agreement, the claimant advanced Rs.4.00 crores to the respondent so that the respondent can settle the dues of the vendors and suppliers. It was further agreed that out of the funds which might be released by the NIELIT, the claimant would be entitled to refund of Rs.4.00 crores. Thereafter the amount received was to be apportioned in the ratio of 61% and 39% between the claimant and the respondent respectively, until the agreed amount of Rs.23.00 crores is paid to the claimant. The claimant paid Rs.4.00 crores to the account of respondent, discharging its obligation under the agreement.
Case of the Claimant 3.2 It is the say of the claimant that after receiving Rs.4.00 crores as above, the respondent went silent. There was no communication as to what amounts were released by the NIELIT. A letter dated 15th December 2017 came to be addressed by the claimant to NIELIT asking for release of the payment in the Escrow Account. The respondent was also called upon to make available the relevant documentation, however since there was no response, arbitration proceedings were initiated by the claimant issuing notice dated 25th January 2018. -8- 3.2.1 The case of the claimant is that upon enquiry with the NIELIT, it became known that the payments and Bank Guarantee of the respondent had stood released in favour of the respondent. It was the grievance of the claimant that the respondent acted with fraudulent intentions and in complete breach of the contemplations in the Settlement Agreement dated 15th July 2016. It was stated that the respondent took away the payments directly from NIELIT without credit in the joint Escrow Account. It was the case that the respondent induced the claimant to pay Rs.4.00 crores and further induced to forego its balance claim of Rs.14,63,64,791/- by asking the claimant to settle for lesser amount of Rs.23.00 crores, and subsequently backtracked from acting as per Settlement Agreement to pay the amount. It was a case that the claimant suffered loss to the tune of Rs.14,63,64,791/-, which amount the respondent became liable to pay the claimant by way of damages.
3.2.2 The claimant thus claimed before the Arbitrator that the respondent was liable to pay to him Rs.4.00 crores, and also Rs.23.00 crores as per the Settlement Agreement, and further the respondent is required to pay Rs.14,63,64,791/- towards damages and to pay all the amounts with 18% interest. -9- Stance of the Appellant-Respondent 3.3 In the statement of defence submitted before the Arbitrator, the respondent termed the claim of the claimant as unjust and malicious as well as non-arbitrable in nature, contending inter alia that the transactions between the parties took place much earlier to the Settlement Agreement and the purchase orders were given between September 2011 and October 2012. According to respondent, it legitimately retained the amounts received from NIELIT and that the claimant coaxed the respondent to enter into the Settlement Agreement. It was stated that the conduct on the part of the claimant in approaching several judicial forums was to be excepted. It was stated that the claimant had filed proceedings before the National Company Law Tribunal and that inflated invoices were given which was an arm twisting exercise in order to receive the entire amount from the NIELIT. The respondent denied any fraudulent conduct on its part. 3.3.1 It was stated that the respondent paid Rs.44,71,21,507/- to the claimant and it was understood that the same was subject to verification and reconciliation of the accounts. It was alleged that the Settlement Agreement was projected and used to extract more money from the respondent than what was due and payable. It was the case that the Settlement Agreement was
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contrary to the confidentiality condition contained in the principal agreement dated 19th June 2012.
3.3.2 It was the further case of the respondent that the claimant delayed the execution of the work and that the quality was defective. It was stated that the NIELIT had withheld the payment, but the vendors started to make representations to NIELIT to pressurize the respondent to make payment. It was further stated that the contractors and employees of the respondent were subjected to criminal proceedings initiated by some vendors. It was stated that since the claimant did not clear the dues of the vendors, the respondent mooted the proposal for Settlement Agreement in which the respondent agreed to pay 61% of the amounts to the claimant out of the amounts released by the NIELIT. According to the respondent, another reason for entering into Settlement Agreement was to see that the vendors did not raise unnecessary protest.
Settlement Agreement 3.4 Before proceeding further, the Settlement Agreement in relation to which the disputes arose between the parties, may be reproduced for ready reference,
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"SETTLEMENT AGREEMENT This SETTLEMENT AGREEMENT is made and executed on this the 15th day of July, 2016 by and between:
MPHASIS LIMITED, a Company incorporated under the provisions of the Companies Act, 1956, having its registered office at Bagmane Technology Centre, K.R. Puram, WTC 3, Block B, 1st Floor, Marthahalli Outer Ring Road Doddenekundi, Bengaluru - 560 048, hereinafter referred to as "Mphasis", which expression shall mean and include its successors and assigns, represented by its Authorised Representative, Mr. Hemanth Ananth Ram, Vice President - Legal & Deputy General Counsel;
AND STRATEGIC OUTSOURCING SERVICES
PRIVATE LTD, a Company Incorporated under the provisions of the Companies Act, 1956, having its registered office at 70/25, 80 Feet Circle Ring Road, 4th Block, Koramangala, Bangalore - 560 034, hereinafter referred to as "SOS", which expression shall mean and include its successors and assigns, represented by its Authorised Representative, Pradeep Patil, Chief Operating Officer.
(Mphasis and SOS are hereinafter individually referred to by their respective names and collectively referred to as the "Parties") WHEREAS Mphasis is engaged in the business relating to Information Technology and Information Technology Enabled Services including providing sales and service of Computer Software and Hardware, Business Outsourcing and other peripherals;
WHEREAS SOS is engaged in the business of providing Information Technology solutions and services including Systems Integration, Information System Outsourcing, Package
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Implementation, Application Development and Maintenance;
WHEREAS Unique Identification Authority of India, hereinafter referred to as "UIDAI", empaneled SOS as an Enrolment Agency which can be engaged by UIDAI Registrars for the purpose of enrolling residents for Aadhar (Unique Identification Numbers) and collecting Demographic and Biometric details of residents of India;
WHEREAS UIDAI Registrars, UID Maharashtra, National Institute of Electronics and Information Technology, SECC Karnataka, NPR BME for the States of UP & Bihar, hereinafter referred to as "Projects", awarded work relating to Aadhaar Enrolment and creation of National Population Register for Usual Residents in Rural Areas, as the case may be, in favour of SOS;
WHEREAS SOS and Mphasis entered into agreements/ PO's as mentioned in Annex A with reference to Projects, with a view to achieve mutual business benefits and capitalize on each- others unique business strengths for successful implementation of the Projects, on mutually agreed terms and conditions;
WHEREAS MPHASIS has intimated completion of all Projects and submitted invoices pertaining to the same in a timely manner, The total receivables to Mphasis which remains outstanding as on date is Rs.37.60 crores (Rupees Thirty Seven Crores Sixty Lakhs).
WHEREAS Mphasis was intimated by SOS that some of closing work and corrections work were performed by SOS to deliver the Projects' deliverables and Mphasis acknowledged the same.
WHEREAS even though the completed work has been submitted to NIELIT and NIELIT has so far not evaluated the work in terms of payables and
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penalties for any delayed submission and has not intimated to SOS the final figures.
WHEREAS in the best business interest of the Parties, the parties have agreed to a settlement, subject to the terms hereinafter appearing, which will be final and binding between the Parties.
NOW IT IS HEREBY MUTUALLY AGREED, DECLARED, CONFIRMED AND RECORDED BY AND BETWEEN THE PARTIES HERETO AS UNDER:
1. SOS agrees to pay INR 23.0 crores (Rupees Twenty Three Crores only) as full and final settlement which will include receivables from Projects. This money will be called as Final Settlement money. SOS agrees to pay the amount of INR 23.0 crores, as mentioned below, as and when the same is received from NIELIT.
2. Both the parties agree to bear liability arising out of penalties or other deductions as may be levied by NIELIT in the proportion of 60% to Mphasis and 40% to SOS.
3. Any unfinished work from Projects will be closed by SOS.
4. SOS agrees to pay and settle directly Rs.2.8 Crores, payable by Mphasis to Kash IT, pertaining to NIELIT project.
5. All other vendor payments related to NIELIT project will be directly taken care of by SOS/Kash IT upon receiving payments from NIELIT.
6. SOS agrees to open an irrevocable Escrow account within two weeks of signing this agreement and advise NIELIT accordingly for making the payments into this Escrow account and money received will be distributed as mentioned below.
7. Subject to the Escrow Account being opened, Mphasis shall pay an amount of Rs.4 crores to
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SOS, within 10 days of opening the Escrow Account, for settling vendor payments as mentioned above. Both parties would work diligently to open the Escrow Account by completing the documentation required by each party.
8. In the event a Bank Guarantee has to be submitted to NIELIT for payments to be released, Mphasis will get the Bank Guarantee issued to NIELIT and all charges for issuing the Bank Guarantee shall be shared between Mphasis and SOS at the ratio of 60% and 40% respectively. Terms and conditions of this understanding are confidential and shall not be disclosed by either party unless mandated by law.
1. That SOS will intimate NIELIT to issue cheque in favour of the above Escrow account and also issue a joint authorization letter with Mphasis as one of the authorized persons.
2. That SOS shall deposit all the payments received by it from NIELIT in relation to the work pertaining to creation of National Population Register in the aforesaid Escrow Account, within forty eight hours of its receipt.
3. That any payment received in the Escrow Account shall first be set off in favour of Mphasis for an amount of INR 4 crores and the balance payments received shall be allocated between Mphasis and SOS at the ratio of 61% and 39% respectively, until Mphasis has been paid in all a total sum of INR 23 crores as mentioned above.
4. That in view of this Final Settlement Agreement arrived at between the Parties, both parties shall forfeit all or any other claims against each other on account of the Projects.
5. ARBITRATION: That all disputes arising out of or in connection with this settlement agreement between the Parties hereto shall be settled mutually between the parties through
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negotiations and in the event any such dispute does not get resolved within 60 days, either party may refer such dispute for arbitration under the provisions of the Indian Arbitration and Conciliation Act, 1996, or any enactment or modification thereunder, by a sole arbitrator. The seat or place of Arbitration shall be Bengaluru, Karnataka.
6. GOVERNING LAW: That all matters arising under or relating to this Settlement Agreement, including the interpretation and construction of this Settlement Agreement shall be governed by, and construed in accordance with the laws of India.
7. JURISDICTION: That Only Courts situated in Bangalore, Karnataka and Courts superior thereto shall have jurisdiction to entertain and try any proceeding between the Parties arising out of this Agreement.
8. AMENDMENT: That no Party shall make any amendment, deviation, alteration, addition, omission or revision to this Settlement Agreement without the express written consent, approval and knowledge of the other Party hereto.
9. SUPERSEDING AGREEMENT: That this Settlement Agreement encompasses all the earlier Agreements/MOUs of the Parties and supersedes all previous negotiations, understandings and agreements between the Parties, whether in oral or written form.
10. That this settlement agreement is signed by the Authorised Representatives to execute this Settlement Agreement and will be binding on the Parties IN WITNESSES WHEREOF THE PARTIES HERETO HAVE DULY EXECUTED THIS AGREEMENT AS OF THE DAY, MONTH AND YEAR FIRST ABOVE WRITTEN."
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3.4.1 Noticing the relevant terms and conditions from the above Settlement Agreement, it was stated that the projects were to be carried out for which the agreements were entered into between the parties and that in order to ensure the mutual business benefits and to ensure the successful implementation of the projects, employing the business strength of both the sides, mutual terms and conditions were arrived at. In respect of the projects, the claimant had raised Rs.37.60 crores as its claim, which was however agreed by the parties to have been settled at Rs.23 crores and appellant herein was to pay the said amount to the claimant, which was in final settlement. 3.4.2 It was agreed that both the parties would be at the liability arising out of the penalties and other deductions which may be levied by NIELIT in the proportion of 60% (claimant) and 40% (appellant herein). The appellant agreed to open Escrow Account and it was further agreed thereupon the claimant-Mphasis would pay Rs.4 crores to the appellant to enable it to discharge the payment to be made to the vendors. It was agreed that the appellant shall deposit the payments received by it from NIELIT in relation to the project work.
3.4.3 Out of such payments which may be credited in the Escrow Account, Rs.4 crores shall be the first set off in favour of
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the claimant who had agreed to pay the said amount as stated above. The amount remaining thereafter was agreed to be allocated and shared within the Mphasis and Strategic Outsourcing Services Pvt. Ltd., in the ratio of 61% and 39% respectively, which was condition No.3 in the Settlement Agreement. Condition No.4 contemplated that in view of the final settlement arrived at between the parties, both the parties shall forfeit all or any other claims against each other, arising on account of the projects.
Appellant's Submissions
4. Learned Senior Advocate Mr. K.G. Raghavan assisted by learned Advocate Mr. S. Varun for the appellant, highlighting the preliminary objection raised before the Arbitrator and the court below, submitted that the Arbitrator ought to have ruled against his jurisdiction. It was submitted that the Arbitrator had no jurisdiction to arbitrate the disputes between the parties in view that the serious allegations of fraud were leveled by the claimant. It was submitted that, in this way, the Arbitrator was divested of a jurisdiction to deal with and proceed with arbitration. The decision of the Supreme Court in A. Ayyaswamy vs. Permasivan [(2016) 10 SCC 386] was pressed into service
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4.1 Assailing the Award of the Arbitrator and the confirmation thereof by the court below on merits, it was submitted that the Award dated 26th November 2019 stood in conflict with the public policy of India. It was submitted that the subject matter of dispute was not arbitrable and was incapable of settlement in the arbitral process. It was next submitted that the court below failed to appreciate that the Award was vitiated by illegality in as much as the Arbitrator delved into the matters beyond the scope of arbitration and that the disputes arbitrated did not fall within the purview of the category of arbitrable disputes. 4.1.1 It was submitted that the aspect was not taken into account that the claimant resorted to the proceedings before more than one forum including before the National Company Law Tribunal and also by filing the First Information Report alleging the commission of offences under the Indian Penal Code. Connecting this aspect with the preliminary objection, it was submitted that allegations made in FIR amounted to allegations of egregious fraud, yet the Arbitrator proceeded to examine the claim petition independent of such allegations and that the court below also erred in not noticing the same. 4.1.2 It was submitted that the Arbitrator could not have ignored that the Settlement Agreement (Exhbit-P1) was entered into in the
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best interest of both the sides, therefore, also the Award was liable to be set aside. According to submission of the appellant, Exhibit-P1 was not a document which created liability and that the independent evidence was required to be led to decide as to whether the sums claimed by the claimant was payable by the appellant. It was submitted that, Commercial Suit No.215 of 2019 was pending between the parties wherein the respondent- claimant had claimed Rs.50,80,83,721/-. 4.1.3 It was sought to be contended that the claimant's case on one hand was that the agreement was enforceable, and on the other hand, it was canvassed that the agreement was result of inducement by the respondent, thus, these two planks of submissions were not reconcilable. The claimant's conduct was of aprobating and reprobating which was not permissible, submitted learned Senior Advocate with reference to the observations in paragraph 26 of the decision of the Supreme Court in Union of India vs. N. Murugesan [(2022) 2 SCC 25]. 4.1.4 It was next submitted by the appellant that the Arbitrator failed to consider that the oral evidence of the witness of the claimant was not trustworthy. It was contended that the direction to the appellant to pay Rs.4 crores was not sustainable. It was
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also the contention that direction to the appellant to pay Rs.10,69,59,630/- was opposed to the facts and law. 4.1.5 Learned Senior Advocate contended that the arbitrable tribunal ignored the fact that the NIELIT had imposed penalty and that the performance of the Settlement Agreement was conditional, provided the parties bear such penalty. It was vehemently submitted that before the arbitrator the prayer of the claimant was for recovery of total amount of Rs.37.60 crores, therefore, the claimant deemed to have given up the Settlement Agreement. The contention was that by asking for the said amount, the claimant resiled from the Settlement Agreement under which the parties agreed to settle the dues by paying Rs.23 crores to the claimant, and also approbated and reprobated. 4.1.6 It was the contention harped by learned Senior Advocate for the appellant that the judgment and order of the court below hardly recorded any reasons. It was submitted that the court below just narrated the case and the contentions of both the sides to answer the points bereft of any reasoning. It was submitted that, the same reflected non-application of mind on the part of the learned court below in dismissing the petition under Section 34 of the Arbitration Act, 1996. In order to support the submission that the court dealing with application under Section 34 of the Act,
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ought to have supplied reasons, the decision of this Court in Union of India vs. M/s. Warsaw Engineers, which was Commercial Appeal No.25 of 2021 decided on 17.04.2021, was pressed into service.
Respondent-Claimant's Submissions 4.2 On the other hand, learned Senior Advocate Mr. Dhananjay V. Joshi with learned Advocate Mr. Kavitha Damodaran for the respondent submitted that the Settlement Agreement (Exhibit-P1) was entered into by the parties out of volition, and that the parties were bound by reciprocal obligations contained in the terms thereof. He highlighted the Clauses of Settlement Agreement dated 15th July 2016. The Award of the Arbitrator only gave effect to the mutual understanding and agreement arrived at between the parties and in no way travelled beyond the agreement in dealing with and deciding the disputes which were all arbitrable disputes with reference to the Settlement Agreement, it was submitted.
4.2.1 Refuting the contention that NIELIT had imposed penalty and that the performance of the Settlement Agreement was conditional upon the payment of penalty, learned Senior Advocate for the respondent-claimant submitted that while there was no evidence to show that NIELIT had imposed any penalty, in any
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view, letter dated 9th March 2018 (Exhibit-R72) suggested that no payment was due to be released and that the appellant was liable to refund Rs.1,11,76,865/- and further that as per Exhibit-R73, the actual release of funds in any view was net amount after the penalty. It was highlighted that the appellant in its evidence before the arbitral tribunal admitted in cross-examination that the payment released by NIELIT was after depriving the penal amount. It was next contended that neither any set off or counter claim was raised in respect of the alleged penalties. 4.2.2 Learned Senior Advocate for the respondent took the court through the judgments in extenso to submit that the scope of intervention by the court under Sections 34 and 37 of the Arbitration Act, 1996 is limited and that the court does not sit in appeal over the Award of the Arbitrator. It was submitted that the grounds on which the Court may interpose itself are statutorily provided in Section 34 and the court cannot travel beyond the same. It was submitted with reference to the decision of the Supreme Court in MMTC Ltd. vs. Vedant Ltd. [(2019) 4 SCC 163], that the arbitral award is not liable to be interfered if the view taken by the Arbitrator is a possible view based on facts, which is the case in the instant case, he submitted. It was submitted that even while applying the 'test of public policy of
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India', the court is not to act as an appellate court and the errors of fact cannot be corrected.
Jurisdiction Not Ousted
5. The preliminary objection that the Arbitrator could not have exercised his jurisdiction and could not have arbitrated the disputes between the parties on the count that there were allegations of fraud, may be disposed of at the outset. It has to be noticed that allegations of such kind and nature, though made, are routinely levered to say that the claimant was forced to sign the agreement for settlement and that he was duped. In the First Information Report also, allegations are within such corners. It could be easily gathered that the allegations of fraud were not of serious nature which would have the impact of ousting the role or jurisdiction of the Arbitrator.
5.1 The disputes which are arbitrable arising from the Settlement Agreement and were to be dealt with by the Arbitral Tribunal by virtue of the arbitration clause, could not be said to have been overshadowed or overridden, much less displaced from the jurisdiction of the Arbitrator, because of the allegations about fraud sought to be raised by the claimant, so as to disregard the legitimacy, much less the jurisdiction of the
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arbitrator. The dispute could be decided by the Arbitrator notwithstanding.
5.1.1 In A. Ayyasamy (supra), dealing with the aspect, the Hon'ble Supreme Court noticed the facts of that case that the allegation of probe was leveled against the appellant stating that he had signed and issued a cheque on behalf of the partnership business in favour of his son without knowledge of the other partner and without their consent. It was stated by the Apex Court that the allegations did not involve any complex issue and could be considered from the accounts and could be therefore, looked into by the Arbitrator.
5.1.2 The Hon'ble Supreme Court held to observe that the situation may be otherwise if in a particular case, serious and complex, "... at the same time, mere allegations of fraud in a pleading by one party against the other cannot be a ground to hold that the matter is incapable of settlement by arbitration and should not be decided by the civil court. The allegations of fraud would be such that not only these allegations are serious that in normal course these may even constitute criminal offence, they are also complex in nature and the decision on these issues demand extensive evidence for which civil court should appear to be more appropriate forum than the Arbitral Tribunal. Otherwise, it may become a convenient mode of avoiding the process of arbitration by simply using the device of making allegations of fraud
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and pleading that issue of fraud needs to be decided by the civil court." (para 18) 5.1.3 In Swiss Timing Ltd. vs. Commonwealth Games, 2010 Organising Committee [(2014) 6 SCC 677], the Apex Court stated that shutting down the doors of arbitration at the initial stage would destroy the very purpose for which the parties had entered into arbitration agreement opting for arbitration, "... Furthermore, there is no inherent risk of prejudice to any of the parties in permitting arbitration to proceed simultaneously to the criminal proceedings. In an eventuality where ultimately an award is rendered by the Arbitral Tribunal, and the criminal proceedings result in conviction rendering the underlying contract void, necessary plea can be taken on the basis of the conviction to resist the execution/enforcement of the award. Conversely, if the matter is not referred to arbitration and the criminal proceedings result in an acquittal and thus leaving little or no ground for claiming that the underlying contract is void or voidable, it would have the wholly undesirable result of delaying the arbitration. Therefore, I am of the opinion that the Court ought to act with caution and circumspection whilst examining the plea that the main contract is void or voidable. The Court ought to decline reference to arbitration only where the Court can reach the conclusion that the contract is void on a meaningful reading of the contract document itself without the requirement of any further proof." (para 28) 5.1.4 Therefore, the principles are clear as to when the arbitrator's jurisdiction could be said to have been ousted when allegations of fraud by one party are sought to be leveled. The
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fraudulent conduct alleged against the party should be of the kind and nature which may require intense investigation into facts and leading of evidence to reach the proof of such allegations. The allegations of fraud, which may displace the power and jurisdiction of the arbitrator to decide the dispute between the parties should be such which have travelled beyond the arbitral realm. Any agreement for arbitration between the parties is something voluntarily agreed upon and course of action, and could not be thwarted on the mere asking or on the basis of barefoot allegations of fraud.
Issues Framed, Reasons Supplied 5.2 While proceeding to consider the merits, it would be apposite to analyse and consider the factual and legal corners of the Award of the Arbitrator which was subject matter of consideration before the court below. The Arbitrator proceeded to deal with the disputes between the parties in the background of Settlement Agreement dated 15th July 2016. 5.2.1 The issues framed by the Arbitrator were thus, "1. Whether the claimant proves that the respondent is liable to re-pay a sum of Rs.4,00,00,000/- (Rupees Four Crore only) and the interest thereon?
2. Whether the claimant proves that the respondent is liable to pay
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Rs.23,00,00,000/- (Rupees Twenty Three Crores only) and the interest thereon?
3. Whether the claimant proves that the respondent is liable to pay a sum of Rs.14,63,64,791/- (Rupees Fourteen Crores Sixty Three Lakhs Sixty Four Thousand Seven Hundred and Ninety One only) towards damages and interest thereon?
4. Whether the respondent proves that it has only received Rs.17,24,59,842/- (Rupees Seventeen Crores Twenty Four Lakhs Fifty Nine Thousand Eight and Forty Two only) from the National Institute of Electronics and Information Technology (NIELIT) after the signing of the settlement agreement on 15.07.2016?
5. Whether the respondent proves that it is entitled to legitimately retain all the amounts received from NIELIT?
6. What order or award?"
5.2.2 Examining the reasons recorded by the Arbitrator, the first issue framed was about appellant's liability to repay Rs.4 crores. The appellant-respondent had objected to the said liability on the ground that the estimated receivable amounts had not come from the NIELIT, and secondly that the said Rs.4 crores was utilized for clearing the liability of the vendors of the claimant. It was rightly reasoned by the Arbitrator that the first objection was of no merit in as much as it was not to be the valid ground to deny what the claimant was entitled to under the Settlement Agreement (Exhibit-P1), the validity of which was not under challenge.
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5.2.3 The Arbitrator referred to Clause 9 of the Agreement which provided that all earlier agreements and memorandums of understanding stood superceded, reading the same with Clause 4 that the party shall forfeit all other claims on account of the projects. The second objection was also devoid of substance, in as much as it could be rightly noticed by the Arbitrator to observe that RW1 in cross-examination was asked question No.11 about any material available to show that the sum of Rs.4 crores was utilized by the respondent to pay the claimant's vendors and not the respondent vendors. The answer was that no material was produced.
5.2.4 The other aspects addressed by the Arbitrator was whether the liability of the respondent-appellant to pay Rs.23 crores was proved, and further whether the respondent-appellant proved that it had received only Rs.17,24,59,842/- from the NIELIT. Considering these issues No.2 and 4 respectively, the Arbitrator could record that receipt of the amount of Rs.17,24,59,842/- from the NIELIT by the respondent-appellant was not disputed and that the same was admitted by the appellant in para 15 of the statement of objections and further reiterated in the examination-in-chief.
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5.2.5 Having recorded the said finding of facts, the Arbitrator considered Clause 1 of the Settlement Agreement to conclude that the respondent-appellant was obliged to pay Rs.23 crores to the claimant in full and final settlement. It was noticed further that Clause 3 of the Settlement Agreement contemplated that from the amounts received in the Escrow Account, the first set off would be of Rs.4 crores to be paid to the claimants, which the claimant had given by way of loan to the appellant-respondent and the balance amount shall be allocated in the proportion of 61% and 39% respectively between the claimant and the respondent. 5.2.6 The factual position was traced and came to be recorded by the Arbitrator that NIELIT had released Rs.4,28,83,814/- and that the said amount has been lying in the joint Escrow Account, out of which Rs.4 crores would go to the claimant as per the terms of the agreement and the balance amount of Rs.28,83,814/- would be available for apportionment in the ratio of 61% and 39% respectively. The aforesaid amount of Rs.4,28,83,814/- was besides Rs.17,24,59,842/- which was directly released by the NIELIT to the respondent-appellant herein. The said amount of Rs.17,24,59,842/- was separate to be treated for the purpose of apportionment in the aforesaid ratio, on such basis, it was concluded by the Arbitrator that taking the total amount available the claimant would receive Rs.10,69,49,630/- in
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addition to Rs.4 crores above, whereas the appellant would Rs.6,83,84,025/- to meet with the proportion of 61% and 39% respectively.
5.2.7 As regards the claim of the claimant that it was entitled to damages of Rs.14.60 crores, which was sought to be justified by the claimant on the ground that total sum of Rs.37.60 crores was as such payable by the other side, but the claimant had agreed for Rs.23 crores as per Settlement Agreement and since the respondent had committed the breach of the Settlement Agreement, the amount was payable.
5.2.8 The Arbitrator held that failure on the part of the respondent to put the amount of Rs.17,24,59,842/- in the Escrow Account did not amount to automatic sufferance of damages by the claimant. It was observed that without foundation of pleadings and the evidence, claim for damages could not be acted upon and that there was no settlement of accounts even otherwise, which was not denied by the claimant. 5.2.9 The Arbitrator held with reference to Clause 3 of the Settlement Agreement that the respondent-appellant was not entitled to retain more than 39% of the amount of Rs.17,53,43,656/-. The Arbitrator observed about the release of the amount and further that the suit pending before the city civil
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court shall be adjudicated independently uninfluenced by the reasons given in the passing of the Arbitral Award. Circumference of Section 34 5.3 Section 34 of the Arbitration and Conciliation Act, 1996 provides for making an application for setting aside Arbitral Award. Sub-section (1) says that recourse to a court against an Arbitral Award may be made only by an application in accordance with sub-section (2) and sub-section (3). Sub-section (2) says that an Arbitral Award may be set aside by the court if the party making application is able to establish that a party was under
incapacity or that the arbitration agreement was not valid or that the party making application was not given proper notice in respect of the appointment or arbitral proceedings. If a party making application establishes that the award has dealt with dispute note contemplated by or not falling within the terms of arbitration or that the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties.
5.3.1 Sub-clause (b) of sub-section (2) is relevant and is reproduced in its material part hereunder, "(b) the court finds that-
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
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(ii) the arbitral award is in conflict with the public policy of India.
Explanation 1.- For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of moralilty or justice.
Explanation 2.- For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
(2A) ...
(3) to (6) ..."
5.3.2 Thus, the challenge to legality of the award of the arbitrator would succeed only on the confined grounds contemplated in Section 34 of the Arbitration Act, 1996.
Principles to be applied 5.4 As is clear from Section 34(2)(d) of the Act afore-quoted, considerations are statutorily prescribed which, if established, may be good grounds to set aside the award. First is that the subject matter of dispute is not capable of settlement to be settled by arbitration. Second is that the arbitral award is in conflict of
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public policy of India. Explanation 1 and Explanation 2 above makes it express as to when the award could be said to be in conflict with the public policy of India. The section witnessed an amendment in the year 2015.
5.4.1 At this stage, the principals to be applied while examining the challenge to the arbitral award, may be revisited with. In MMTC Limited (supra), the Supreme Court observed that the court would not sit in an appeal over the arbitral award and the interference is permitted only on limited grounds provided under Section 34(2)(b)(ii) of the Act of the fact, which is as under, "... if the award is against the public policy of India. As per the legal position clarified through decisions of this Court prior to the amendments to the 1996 Act in 2015, a violation of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, conflict with justice or morality, and the existence of patent illegality in the arbitral award. Additionally, the concept of the "fundamental policy of Indian law" would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice, and Wednesbury reasonableness. Furthermore, "patent illegality"
itself has been held to mean contravention of the substantive law of India, contravention of the 1996 Act, and contravention of the terms of the contract." (para 11) 5.4.2 It was further observed that even where the court may interfere in the arbitral award in terms of Section 34(2)(b)(ii) of the
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Act, such interference does not entail a review of the merits of the dispute, and is limited to the situations where the findings of the arbitrator are arbitrary, capricious or perverse or when the conscience of the court is shocked, or when the illegality is not trivial but goes to the route of the matter. 5.4.3 It is held by the Hon'ble Supreme Court in McDermott International Inc. vs. Burn Standard Co. Ltd. [(2006) 11 SCC 181] that by interpreting the terms of a contract, the conduct of parties and correspondences exchanged would also be relevant factors. It was further stated that it is within the jurisdiction of the arbitrator to consider the same. In Associate Builders vs. DDA [(2015) 3 SCC 49] and previous other decisions, the propositions laid down that an arbitral award may not be interfered with, if the view taken by the arbitrator is a possible view based on the facts. 5.4.4 Again in Dyna Technologies Private Limited vs. Crompton Greaves Limited [(2019)20 SCC 1], the Hon'ble Supreme Court observed to reiterate that merely because an order under review on facts and interpretation of the contract exist, it would be no ground for the court to set aside the award. The Hon'ble Supreme Court further observed as under, "There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted
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by various courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated." (para 24) 5.4.5 In UHL Power Company Limited vs. State of Himachal Pradesh [(2022) 4 SCC 116), again taking exception to the court's re-appreciating the findings written by the arbitral tribunal and taking a different view about the implementation of the agreement for its terms and conditions agreed upon between the parties, it was observed that the court would not undertake such exercise under Section 34 of the Act as it would amount to virtually acting as a court of appeal.
Parallel Parameters 5.5 When it comes to the jurisdictional extent of appeal under Section 37 of the Act, against the order passed in application under section 34 of the Act, the parameters of challenge and the bounds are held to be parallel.
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5.5.1 In MMTC Limited (supra), it was observed that the exercise of jurisdiction under Section 37 of the Act is governed by the same parameters applicable to the consideration of the award under Section 34 of the Act.
"...it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section
34. In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court under Section 34 and by the court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings." (para 14) 5.5.2 The Supreme Court has observed that as it is, the jurisdiction conferred on courts under Section 34 of the Arbitration Act is fairly narrow, when it comes to the scope of an appeal under Section 37 of the Act, the jurisdiction of the appellate court examining the order, setting aside or refusing to set aside an award, is all the more circumscribed.
5.5.3 The Apex Court in MMTC Ltd. (supra) stated, "As far as Section 34 is concerned, the position is well-settled by now that the Court does not sit in appeal over the arbitral award and may interfere on merits on the limited ground provided under Section 34(2)(b)(ii) i.e. if the award is against the public policy of India. As per the legal
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position clarified through decisions of this Court prior to the amendments to the 1996 Act in 2015, a violation of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, conflict with justice or morality, and the existence of patent illegality in the arbitral award. Additionally, the concept of the "fundamental policy of Indian law" would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice, and Wednesbury reasonableness. Furthermore, "patent illegality" itself has been held to mean contravention of the substantive law of India, contravention of the 1996 Act, and contravention of the terms of the contract." (para 11) 5.5.4 In Bombay Slum Redevelopment Corporation Private Limited vs. Samir Narain Bhojwani [(2024) 7 SCC 218], the Hon'ble Supreme Court highlighted that the jurisdictional limits of the court below dealing with Section 34 of the Act as well as considering the appeal under Section 37 of the Act are similar, "The jurisdiction of the appellate court dealing with an appeal under Section 37 against the judgment in a petition under Section 34 is more constrained than the jurisdiction of the Court dealing with a petition under Section 34. It is the duty of the appellate court to consider whether Section 34 Court has remained confined to the grounds of challenge that are available in a petition under Section 34. The ultimate function of the appellate court under Section 37 is to decide whether the jurisdiction under Section 34 has been exercised rightly or wrongly. While doing so, the appellate court can exercise the same power and jurisdiction that Section 34 Court possesses with the same constraints." (para 26)
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No Violation of Public Policy 5.6 Since the conflict or contravention of public policy of India is a ground on which the arbitral award can be set aside, and since the same ground also was advanced on behalf of the Appellant in course of the submissions, the said test may also be considered in the facts of the present case as to whether the award in question suffers on that count.
5.6.1 Section 34(2)(b)(i) underwent an amendment in the year 2015, whereby the concept of public policy of India as a ground contemplated therein was made further explicit to make it a concept defined further. The pre-amendment connotation of 'public policy of India' was explained by the Supreme Court in Oil and Natural Gas Corporation (ONGC) vs. Saw Pipes Ltd. [(2003) 5 SCC 705], 5.6.2 The Supreme Court observed in the context of a challenge to a domestic arbitral award under section 34(2)(d)(ii) of 1996 Act, when it stood prior to amendment, "... the phrase "public policy of India" used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is, on the face of
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it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view, in addition to narrower meaning given to the term "public policy" in Renusagar case, it is required to be held that the award could be set aside if it is patently illegal. The result would be
-- award could be set aside if it is contrary to:
(a) fundamental policy of Indian law; or
(b) the interest of India; or
(c) justice or morality, or
(d) in addition, if it is patently illegal.
Illegality must go to the root of the matter and if the illegality is of trivial nature, it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void."
(emphasis supplied) (para 31) 5.6.3 In Associate Builders vs. Delhi Development Authority [(2015) 3 SCC 49], the Supreme Court dealing with the 'public policy of India', in the context of Section 34 prior to 2015 amendment, it was held that an award can be said to be against justice only when it shocks the conscience of the court, giving illustration that where an award without recording reasons granted the amount much more than the claim was restricted to, it would certainly show the conscience of the court rendering the award to be contrary to justice.
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5.6.4 Several decisions following on the point, in a more recent decision in OPG Power Generation Pvt. Ltd. vs. Enexio Power Cooling Solutions India Pvt. Ltd. [(2024) SCC Online 2600], the Supreme Court considered the 'public policy of India' as a ground under section 34(2)(b)(ii) of the Act, as operative in pre- 2015 and post-2015, observed in para 36 that 'what is clear from above is that for an award to be against public policy of India a mere infraction of the municipal laws of India is not enough. There must be, inter alia, infraction of fundamental policy of Indian law including a law meant to serve public interest or public good.' 5.6.5 After analyzing a series of judgments, the position as emerging after 2015 amendment came to be summed up thus, "The legal position which emerges from the aforesaid discussion is that after "the 2015 Amendments" in Section 34(2)(b)(ii) and Section 48(2)(b) of the 1996 Act, the phrase "in conflict with the public policy of India" must be accorded a restricted meaning in terms of Explanation 1. The expression "in contravention with the fundamental policy of Indian law" by use of the word "fundamental" before the phrase "policy of Indian law" makes the expression narrower in its application than the phrase "in contravention with the policy of Indian law", which means mere contravention of law is not enough to make an award vulnerable. To bring the contravention within the fold of fundamental policy of Indian law, the award must contravene all or any of such fundamental principles that provide a basis for administration of justice and enforcement of law in this country. Without intending to exhaustively enumerate instances of such contravention, by
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way of illustration, it could be said that (a) violation of the principles of natural justice; (b) disregarding orders of superior courts in India or the binding effect of the judgment of a superior court; and (c) violating law of India linked to public good or public interest, are considered contravention of the fundamental policy of Indian law. However, while assessing whether there has been a contravention of the fundamental policy of Indian law, the extent of judicial scrutiny must not exceed the limit as set out in Explanation 2 to Section 34(2)(b)(ii)." (para 52) 5.6.6 Thus, considered from the stand point of above principles governing the aspect of public policy of India as a ground, the contention raised on behalf of the appellant that in overall effect the arbitrator's award stands to violate the public policy of India is not only meritless, but appeared to have been advanced in an apparent bid to escape from the obligations and liabilities arising from the Settlement Agreement. The submission is also to be outrightly negative, in the facts of the case, that the Settlement Agreement is in conflict with public policy of India in its any dimension or that it runs contrary to Section 23 of the Indian Contract Act, 1872.
Reasons Supplied
6. It was one of the vehement contentions raised by learned Senior Advocate for the appellant that the impugned judgment and order of the court below is required to be set aside on the ground that there are no adequate reasons. Learned Senior
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Counsel wanted the Court to remand the same for fresh decision. These submissions by the appellant hardly enjoyed support on facts or in law.
6.1 Spelling out all reasons need not be in particular format or language. Reasons may be available from the observations made by the court at different places in the judgment or even on overall consideration of the judgment. What is essential is that the court has applied its mind. When application of mind is reflected in a given case, it becomes synonymous with reasons. 6.1.1 This application of mind with adequate reasons, is reflected in the judgment. It is also the principal as reported in paragraph 14 of the decision in Hon'ble Supreme Court in Laliteshwar Prasad Singh and others vs. S.P. Srivastava [(2017) 2 SCC 415] that when the appellate court agrees with the views of the trial court on evidence, it need not restate effect of evidence or reiterate reasons given by the trial court and that the expression of general agreement with the reasons given by the trial court would ordinarily suffice. It is in the cases where the appellate court reverses the findings of the trial court, the recording of elaborate reasons are expected for rightful exercise of jurisdiction.
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6.1.2 The case does not require remand. In Bombay Slum Redevelopment (supra), the Hon'ble Supreme Court in paragraph 29 of the judgment stated to lay down that there are only exceptional cases where remanding an appeal under Section 37 of the Act may be warranted. Exceptional circumstances indicated are that where the court has summarily disposed of the petition without consideration of merits or that it is disposed of without service of notice to the respondents or that proceedings under Section 34 of the Arbitration Act when one or more contesting parties have died and their legal representatives were not brought on record.
6.1.3 Measured by the above criteria, even otherwise on going through the impugned judgment and order of the court below, it is not possible to conclude that the judgment is bereft of reasons. The application of mind of the court below is indeed reflected in the discussion. The court below has considered the decisions of the Hon'ble Supreme Court and has also considered the Clauses of the agreement from paragraph 36 to paragraph 43 of the judgment in the context of their factual contours of the arbitral disputes. Not only the reasons are reflected, but application of mind of the court on the merits of the case is also plausible. Therefore, the submission on part of the appellant that the impugned judgment and order does not contain any reasons or
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that the court should remand the case for fresh consideration falls flat on merits.
Within Corners of Settlement Agreement
7. The Award of the Arbitrator closely analysed as above and the reasons supplied by it to come to the final conclusion to pass the award, goes to show that the Arbitrator has arbitrated the disputes which arise from the Settlement Agreement. The arbitrable disputes dealt with by the Arbitrator were within the corners of the clauses and conditions agreed upon by the parties. The Arbitrator acted within the bounds of Settlement Agreement, to pass the Award. There was no jurisdictional aberration of any kind, much less an illegality in the award.
8. As elaborated and discussed in the foregoing paragraphs, the judgment and order of the commercial court below read with the Award of the Arbitrator, does not suffer from any error. None of the grounds in Section 34 of the Arbitration Act, 1996, also to be applied while testing the legality of the judgment and order by the appellate court, found to be existing so as to accept any of the contentions of the appellant in assailing the impugned judgment and order and the Award of the Arbitrator.
9. In the above view, the Award of the Arbitrator and the confirmation thereof by the commercial court below stand
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eminently proper and legal, requiring no interjection or interference.
Conclusion
10. The present appeal is liable to be dismissed for the reasons above. It is accordingly dismissed.
Sd/-
(N.V. ANJARIA) CHIEF JUSTICE Sd/-
(K.V. ARAVIND) JUDGE KPS